Buying a policy is like shielding your loved ones, providing them with the support they want once you die. So life assurance is essential for anyone to use. Before going into the topic, let me tell you what life insurance is? It is a contract between an insurance firm and an insurance policyholder. Here the insurance firm is promising to pay an outsized amount of cash on the return of a premium, on the death of the insurer. It means once an insurer dies then the insurance firm will need to pay the quantity to his spouse or his children, which can help them financially.
Procedure To Claim Life Assurance If Someone Dies:
In this article
I am going to describe the procedure step by step; thus you don’t need to face any problem.
Step -1: After the death of the insurance policyholder, the foremost important task is to tell the insurance firm that the insurer is not any more. The insurance firm divides the category into two parts one is an early death, and the other a non-early death. If an insurance policyholder dies within 3 years of insurance, then it’ll be called early death. And if he dies after 3 years of insurance, then it’ll be a non-early death.
Step -2: After informing the firm, you have to collect necessary forms from the municipal department.
Step -3: In this modern time, everything goes online, making you comfortable to access. But then, the important task is collecting the specified papers they need for claiming life assurance.
Documents To Claim Life Insurance
The essential papers normally needed are-
i. The original policy documents.
ii. The applier must prove that he’s a legal heir of the deceased by submitting the “Will,” or if there is no proof, then it’s to be tested by Succession laws.
iii. ID proof of the applier is necessary.
iv. Notarized death certificate of the insurance policyholder.
v. In case the death happens within the hospital, then the hospital document.
vi. And the claimer’s current residence proof.
vii. Post mortem report.
viii. FIR copy (in case of unnatural death).
ix .The driver’s license of the policyholder.
x. Final police report.
xi. Age proof of insurer.
xii. Cremation certificate (for early death) Consult your insurance company for more details about the procedure if required.
Time Taken By The Agency To Pay The Claim?
Life insurance advantages are generally paid once the insured party dies. Many nations permit insurers thirty days to review the claim. If an organization denies your claim, then they will clear everything that why they denied it. Most insurance companies pay among thirty to sixty days of the date of the claim.
Payout Options Of Life Insurance
Make sure that if you have the interest to claim life insurance after the insurer death, do it very quickly because later you may have to do several steps.
Everyone will think that the insurance company will pay all at once of your claim for a life insurance plan. But that is one of the payout options. Let us discuss the various payout options that the insurance company will provide.
It is the simplest payout option in which the insurer can get the total amount of his/her policy. Installment Payments: In this option, the policy nominee can withdraw the loan amount in installments. This sometimes can be beneficial because 2-3% of interest generally adds up in savings account.
b. Straight Life Income:
The insurance company will pay insurance money in periodic payments on a monthly, quarterly, or yearly basis. These payments are guaranteed for the rest of the beneficiary’s life. But one of the major disadvantages with this option is if the beneficiary dies right after claiming the life insurance policy, then the company will withhold the rest of the money with itself.
c. Life Income With Period Certain:
The Company will make sure that even if the beneficiary dies, the family can get their insurance money in installments over some time. For example, a family is supposed to get 20 years of life insurance policy returns after the insured dies. If a beneficiary dies five years later, then the family still gets 15 years of policy money according to this option.
d. Join Life With Survivorship:
This pay-out option is calculated on the lives of two people, and a certain period can also get included in this option. If one among those two dies the other can get benefits from the policy. Interest-only: In this option, the interest generated from the principal amount is only paid to the beneficiary and the company can keep the life insurance benefits.
Why Are Delays In Life Insurance Claims?
Some Pay Out Delays
Many things will end in a delay in payment. The insured person’s family may face delays of six to twelve months if the insured dies inside the primary 2 years of applying for the insurance. The reason: the one to two years of contestability clause.
Most of the insurance policies contain this clause that permits the carrier to research the whole application to confirm that fraud wasn’t committed.
Most policies contain a suicide clause that enables the corporate to deny edges, if the insured commits suicide throughout the primary 2 years of the policy.
Payments can also get delayed if the nominee is included in the assassination of the insurer. The policy claimed by the nominee is withheld until the case is solved. If the nominee is not guilty, then he claims the policy.
Delays to payouts can also arise if:
- The insured party died because of criminal activity, like driving.
- If the insured person says lots of lies in the insurance policy application.
- And if the insurance holder excludes health problems or risky activities like deep-sea diving, skydiving, etc.
Deaths Covered Under The Life Insurance Policy:
a. Natural Death:
If a policyholder dies because of health-related problems or natural death, the nominee can claim an insurance policy.
b. Death Due To Accident:
If a policyholder died because of an accident, then the policyholder can get the policy money in the term-insurance option. But if a policyholder dies because of the influence of any drug, then the claim will get rejected.
If the policyholder dies or commits suicide after 1 year of the start of the policy, then death benefits can be given. But according to a new rule issued by the Insurance Regulatory and Development Authority of India (IRDAI), a nominee can get 80% of the total premiums paid till the date of death or surrender value as on the date of death, whichever is higher. This will apply only when the policyholder commits suicide within 12 months from the date of the policy’s commencement or the date of revival of the policy. But this always depends on different agencies. Many companies don’t even pay a penny for a suicide case.
Why All Death Cases Are Not Covered Regarding Life Insurance?
There are so many reasons why all the death cases are not covered regarding life insurance. I am going to discuss some of them.
1. Murder Of The Policyholder:
In cases like the policyholder were murdered by someone and it knows that the insurer is a criminal and was attached to any criminal cases, the insurance company will not pay anything to the spouse his or her children. If the policyholder is involved in any criminal process and the results go to death, the insurance company will not pay anything to the spouse. But in any case, the murder charge is dropped by the police, and if they get a final copy from the police, then they will pay the money to the spouse or the children.
2. If A Death Happens For Alcohol:-
If the policy holder’s death happened for any narcotic or any alcoholic beverages, then the insurance company will not pay anything to the spouse or the children. And if in the insurance policy application the insurance holder doesn’t say it that he or she takes alcohol or narcotic drugs anything like that then the insurance company will not pay anything to the spouse or the children. So, it is better to clear all the things when you are going to apply for insurance.
3. Not Revealing The Habit Of Smoking:-
If you are a smoker and not revealing it to the insurance policy application at the time of filling it, it also has a chance that in the insurance company will not pay anything to your spouse or children. Because smokers have a great chance of health damage, the insurance company will not agree to risk some cases.
4. If The Policyholder Dies In Some Hazardous Activities:-
If the policyholder dies during any type of hazardous activity, then the insurance company will not pay anything to the spouse or the children. If the policyholder has a great intention to do sporty things like paragliding, skydiving, deep-sea diving, hiking, car racing, bike racing, etc. Then the policyholder must have to disclose this when he or she is filling the insurance policy application. If the policyholder doesn’t do that, then the insurance company will not pay anything to the spouse or the children. So, it is good to clear everything before claiming any life insurance.
5. If The Policyholder Dies In Any Preexisting Health Condition:-
In any case, which will be treated as a preexisting health condition, the insurance company will not pay anything. Preexisting health condition means if someone dies by self-inflicted, an overdose of drugs, or any sexually transmitted disease, and other diseases like AIDS, HIV in such cases, the insurance company will not pay anything to the spouse or the children. So, you have to be very sure about those things before applying for life insurance.
6. Suicidal Activities-
It is a very common and simple to understand that no insurance company will pay on commuting suicide. But, normally, the insurance company will not pay anything to the policyholder’s spouse if the policyholder commits suicide in the first- year on applying life insurance policy application. But there are some insurance companies which will pay you on the terms and conditions if this policyholder committee’s suicide after the 2nd year from the filling of the insurance policy application. So take care of these important things and then apply for life insurance.
7. Death Due To Childbirth: –
Yes, it is also one of the most popular and valid reasons for death, which are not covered by the life insurance companies. If any mother dies at the time of giving birth to her child, then her children will not get any money from the insurance company. So everyone has to take care of these important things which are a major reason for the death case and which is not covered regarding insurance.
8. If The Policyholder Dies In Any Natural Disaster:-
If the policyholder dies by any type of natural disasters like tsunami, earthquake, or any other storm then the insurance company will not pay anything to the spouse or the children of the policyholder. So, if you don’t know all the processes and face so many problems, you did the wrong things. At first, you have to clear all the things from the life insurance company and only after that you have to apply for life insurance.
Some Important Information About Life Insurance Policy-
- As in the insurance company should have to be contacted as soon as possible after the death of the insured to start the claims and payout method.
- Many states permit insurers thirty days to review the claim, pay it out, deny it or kindle extra information from the family members.
- Life insurance edges area unit usually paid inside thirty to sixty days of filing a claim; however, delays will arise if the insured dies inside the primary 2 years of the issuing of a policy, as an example.
- Payout choices like lump sums, annuities, and installments.
Frequently asked questions:
1. How do you collect life insurance after death?
Generally, the nominee has to file a death claim by providing a death certificate in the insurance company. Later the company will review your claim and approach you for further steps.
2. How can I claim LIC in case of death?
The steps that I have discussed above to claim the insurance same goes with the LIC. They ask you to provide Form A –statement with details of the deceased and the claimant. This is generally issued under M.W.P.
3. What reasons will life insurance not pay?
When the policyholder died because of illegal activities, an act of war, fraud, because of smoking and suicides within a particular period which results in rejection of claim etc. are some of the reasons that claim can get rejected by the insurance company.
4. What happens if I terminate my life insurance policy?
You may not get back your premium paid if you wish to terminate your policy. All the money will go in waste if you wish to terminate a life insurance policy.
5. Which is a better: term or whole life insurance?
Term life insurance provides insurance cover over for a particular period, and it is more affordable than whole life insurance.
Life insurance is a great thing, which helps financially to the person who is running his or her family on behalf of the dead person. But when the individual is no more to serve his family, this life insurance saves them financially. So if you do not apply yet for any life insurance under any Life insurance company, then go ahead and apply for some and save your family for the future. Let us know by commenting below that is this article helpful for you or not. Thank you.